hw2 - 180.351 Labor Economics Homework Assignment 2 Yuya...

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180.351 Labor Economics Homework Assignment 2 Yuya Takahashi March 3 2017 Solve the following 3 big questions. The full score is 100. Students are encouraged to work as a group, but each student should write her/his own answer. The due is March 14 in class. 1. (36 points in total) Answer the following questions (drawing a graph helps a lot!). (a) Recall our discussion on Card and Krueger (1994). Explain their di/-in-di/ strategy and brie°y summarize their ±ndings. Clearly state what the treatment and control groups are. (b) Recall the model we discussed in class where ±rms o/er a package consisting of wage and employer- provided insurance. The compensating wage di/erential model implies the trade-o/: a worker gives up high wage to obtain a package of health insurance. However, many empirical studies do not ±nd a negative correlation between wages and the presence of employer-provided health insurance. Explain this contradiction.
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